Oil prices extended their decline on Wednesday as easing fears of Gulf military conflict and progress toward an Iran-Oman deal on the Strait of Hormuz weighed on the market. Brent and WTI crude futures both fell more than 2%, with analysts pointing to lighter-than-expected U.S. sanctions on Iran as a key driver.
Brent and WTI extend losses
Brent crude futures for October delivery declined 2.08% to $86.74 a barrel as of 2:41 a.m. ET on Wednesday. U.S. West Texas Intermediate futures for October dropped 2.37% to $80.41 per barrel over the same window.
According to CNBC: "U.S. sanctions on Iran were less severe than anticipated", said Dan Coatsworth, head of markets at AJ Bell. He added that the lower oil prices helped markets regain some poise as government bond yields eased back from their recent highs.
Hormuz risk eases
Paolo Broccardo, BankPro's chief executive officer, said the shift away from military action reduced the perceived risk to Gulf supply, even though the U.S. did not rule out other interventions. Pakistan also reported meaningful progress in talks aimed at de-escalation and restoring navigation through the Strait of Hormuz, Broccardo noted.
Iran and Oman, meanwhile, were discussing a joint temporary shipping route through the strait, a precursor to a permanent arrangement to administer the waterway. Oman's foreign minister said in a social media post that future management of the strait and a permanent solution would follow in due course, adding that discussions with regional partners would support peace, cooperation, stability and freedom of navigation.
Source: CNBC
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